VAT, GST, DST... ASAP?
Kitty Miv, Editor
21 April, 2021
Continuing with our digital focus from last week, we turn first to the EU's VAT E-Commerce Reform package, which is set to come into force on July 1, 2021.
Various of the EU member states – including most recently Poland, which saw its Council of Ministers sign off on the adoption of the new measures – have said that they are good to go with regard to the package, which aims to level the playing field between online and 'bricks and mortar' providers of goods and services, in addition to ensuring that the right amount of VAT gets collected, and in the 'right' places, by steering things towards the destination principle of taxation.
However, a number of business associations in the EU, including those most likely to feel the impact of the measures as they will be required to administer certain aspects of it, have argued that the EU as a whole may not be ready in time for the measures to be implemented, with potentially far-reaching consequences.
In a joint letter to the European Commission seeking a delay to the implementation of the EU's VAT e-commerce package, representatives from: the American Chamber of Commerce to the EU (AmCham EU); the European Express Association; the European Association of Forwarding, Transport, Logistics, and Customs Services; PostEurop; and the European Shipppers' Council recommended a "new date for uniform implementation based on proven and tested readiness of all relevant systems and procedures in all EU member states and not earlier than January 15, 2022."
The OECD, meanwhile, revealed that its next potential target, in VAT terms, is likely to be the sharing and gig economy, with the release of a new report, titled 'The Impact of the Growth of the Sharing and Gig Economy on VAT/GST Policy and Administration'.
The document points policymakers towards the potential contribution that digital platforms could make in collecting value-added tax from the sharing and gig economy.
Introducing the report, the OECD explained that: "The rise of the sharing and gig economy, powered by digital platforms, has fundamentally transformed several industries within just a few short years, particularly in transportation, tourism, and hospitality. Large numbers of new economic operators, often private individuals, have entered the market offering short-term accommodation, transport, and other services via digital platforms. This has raised concerns over whether existing VAT/GST frameworks are sufficiently capable to protect VAT/GST revenues and level the playing field with traditional businesses."
The report presents a range of suggestions for the application of VAT/GST to sharing and gig economy operators, with the Organisation explaining that: "These solutions are designed to ensure a level playing field between operators in the rapidly growing sharing and gig economy and more traditional businesses. The report highlights the central role that sharing and gig economy platforms can play in providing information to tax authorities and collecting the VAT/GST on activities in the rapidly growing sharing and gig economy."
And last but not least, digital tax matters were also in focus in the Canadian budget, published on April 19, 2021, which included plans for a digital services tax, among other measures.
The Budget included a proposal to introduce a digital services tax at a rate of three percent on revenue from digital services that rely on data and content contributions from Canadian users. The tax would apply to large businesses with gross revenue of EUR750m or more. It would apply as of January 1, 2022, and remain in place until an acceptable multilateral approach, on new international tax rules for the digitalized economy, comes into effect.
Until next week!
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